Woolies is the canary in the premiumisation middle class coal mine

Detailed summary

A sharp slowdown in Woolworths Foods sales has exposed the financial strain of the middle class, sending consumer shares lower and challenging premium grocery ...

A sharp slowdown in Woolworths Foods sales has exposed the financial strain of the middle class, sending consumer shares lower and challenging premium grocery spending.

It is not often in these turbulent times that a real life market update, actual data, affects markets to the extent that one did yesterday.

We have become accustomed to more mundane things moving markets, like a global AI CEO having an affair with an (alleged!) Chinese spy.

The JSE took a hit, while consumer shares across the board, whether they be in clothing or retail, were largely down, all because of one release.

It said its “group turnover and concession sales for the period grew marginally by 0.2% and 0.1%”.

I think for many people reading the release the real siren was the numbers from the food business.

And thus was shaken one of the central tenets of many an investment thesis: that our middle class will continue to find the money to buy a lunchtime crispy chicken wrap at Woolies (with a side order, if you’re feeling rich, of kale chips).

Considering the decoupled era in which we live, where markets hardly ever really seem to bear any reflection on the economies which underlie them (look at how just a few companies are boosting the Nasdaq while beneath them many are struggling), it was a welcome reminder that economic gravity is actually a thing.

For a very long time, people like me, in columns like this [Business Maverick Editor’s comment: Not you, Stephen... the editor wouldn’t allow it] have been prattling on about high fuel prices and the impact they are having.

Opening of the article, excerpted from Daily Maverick. To read the rest, open the article on the publisher's site.